Public E&S Companies Post Strong Growth In Fourth Quarter
While worry about the future for equipment and supplies suppliers runs high, the past has been very good for most large publicly traded E&S companies.

Preliminary fourth-quarter 2007 numbers for 10 publicseight equipment-oriented companies and two tabletop and supplies enterprisesshow blended revenues rising 16% over fourth-quarter '06. Pulling out acquisitions, the figure was an estimated 12%. The numbers are compiled by John Muldowney, president of Clarity Marketing, Tipp City, Ohio.

Of the 10, the eight equipment companies posted a whopping 26.9% gain; 16.6% excluding acquisitions. The two supplies companies' blended sales declined 1.8% for the quarter

For the fiscal year, revenues for the 10 companies rose an estimated 12%, with organic growth pegged at 6.1%. Equipment companies saw stronger numbers, with revenues up 19.1%, 15.9% of that organic. Blended revenues for the supplies companies rose 3.8% for the year.

While the quarterly and annual numbers are skewed by very strong results from two equipment companies, strong growth was reported by nearly all firms tabulated. In the fourth quarter, only one company reported a decline in revenues, with four reporting double-digit gains. Aggressive price increases were a factor.

The growth of the public companies' revenue is sharply higher than that of the wider E&S market. The Manufacturers' Agents Association for the Foodservice Industry, which surveys its members for its Quarterly Business Barometer, saw sales rise only 2.1% in fourth quarter compared to the year-earlier period. The figure marked the slowest gain since third-quarter '04.

NRA's Performance Index Nudges Upward, Expectations Rise
Restaurant operators are a bit more optimistic about the future than they have been, according to the monthly survey conducted by the National Restaurant Association. As a result, the overall NRA Restaurant Performance Index ticked up 0.1 point in January to 98.9. Still, current conditions remain difficult for many operators, as sales and traffic remain restrained.

Although both the same-store sales and traffic components of the report's Current Situation Index showed slight gains over December of 0.3 and 0.1 points, again more operators reported declines than gains. Both the components tracking labor and capital expenditure during the past three months declined, with the capital number falling 0.7 point to 98.2. The overall Current Situation Index was off 0.2 point, to 97.9. It was the fifth consecutive month the Current Situation Index remained below 100. Below that number signals contraction; above marks expansion.

The overall RPI benefited from strong gains in expected business conditions during the next six months, up a strong 1.3 points, and expected staffing outlook, up 0.6. The expected capital expenditure and same-store sales numbers were flat. Overall, the Expectation Index rose 0.5 point.

"Despite the improvement in the forward-looking indicators, the current situation indicators still reflected a challenging period for restaurants," said Hudson Riehle, NRA's senior v.p. of research and information services.

Soaring Commodity Prices Raise Fears Of StagflationThe prices of key commodities, led by energy and food costs, as well as industrial commodities, continued to surge in January and February. The Federal government's Producer Price Index jumped 1% in January. And when final numbers for February's Index come in, they'll likely be higher again. Purchasing magazine's Commodity Price Index increased 1.4% for February.

Food prices at the wholesale level rose a whopping 1.7% in January following a 1.4% hike in December. Energy jumped 1.5%. The overall PPI has risen 7.5% in the past 12 months, the strongest gain since 1981.

Purchasing's Index gain was driven by a 13% increase in flat-rolled steel products, higher energy costs and even a gain in the price of containerboard, the material used in paperboard packaging.

The strong rise in prices at both the wholesale and consumer levels has many economists worried about a return to the "stagflation" last seen in the late 1970s and early '80s. The condition entails a nasty combination of a stagnant economy and rising prices.

Consumer Confidence Drops To Recession Levels
Both major indicators of consumer confidence plummeted in February, as consumers continued to absorb the double whammy of rising prices and a slowing job market.

The Consumer Sentiment Index compiled by The University of Michigan Surveys of Consumers hit a 16-year low as it dropped to 70.8 from 78.4 in January.

"Consumer sentiment remained at the same low level that was recorded during the recession periods of the mid-1970s, early '80s and early '90s," Richard Curtain, surveys director, said.

The Conference Board's Consumer Confidence Index also plunged in February, to 75, from a revised 87.3 in January. It was the lowest reading in 15 years but for a brief period at the start of the Iraq War in 2003.

The forecast update is now available. The PowerPoint deck includes updated data on macroeconomic, operator and materials price trends, as well as the forecast revision.

Those who attended FER's President's Preview Forecast Meeting last August, or have purchased the forecast since, can obtain the revision for no charge by emailing a request to rashton@fermag.com. Others can purchase the revision for $249. Further details can also be obtained by calling 800/986-9616.